The national annual effective rent growth reached 4.33% in October, a 2 basis point (bps) increase from September’s 4.31% and the highest point of the year to date, according to the latest data from Axiometrics.. October marked the eighth straight month in which effective rent growth has increased.
The continued strong effective rent growth indicates that the national apartment market is likely to finish the year above the 4% mark. Even taking seasonality into consideration, Axiometrics said it does not expect the market to change too drastically during the remaining two months of the year.
“Effective rent growth typically declines during the fourth quarter, but not so far in the ‘Year of the Apartment,’” said Stephanie McCleskey, Axiometrics Vice President of Research. “Even though the rate of increase has slowed, the fact the market is steady means that the factors fueling the strength of 2014 — job growth, desire to rent instead of own and barriers to homeownership — are still in force.”
YTD Rent Growth Remains Best in this Decade
Whether year-to-date (YTD) effective rent growth remains above 5% during the usual holiday-season leasing doldrums remains to be seen. “But it still looks like a good bet for 2014 YTD effective rent growth to be above 4.0%,” McCleskey said.
YTD effective growth measured 5.2% for the first 10 months of 2014, down 30 bps from September’s 5.5% but up 27 bps from the 4.9% YTD growth recorded in October 2010. The 2010 trend decreased by 40 bps to 4.5% during the last two months of that year; 2014′s rate would have to slide 67 bps to fall below the first year of this decade.
Occupancy Sagged in October
The national occupancy rate dropped to 94.9% in October, the first time it has been below 95% since April, but the news is good when taken in context. October 2014 occupancy is higher than any other October since at least 2008, when Axiometrics started reporting monthly, and occupancy is 95% on a same-store, annual basis.